The slow pace of equities is projected to boost improvement recorded in the fixed income space observed last week, as analysts say that the decline in the equity market will create an entry opportunity for “discerning” investors.
The fixed income space saw a slight uptick in yields which propelled a huge selloff on the equity sector of the Nigerian Stock Exchange (NSE) in the previous week.
There was a 1.66 percent decline in the All-Share Index (ASI) to close at 41,709.09 and the market capitalisation closed at N21.819 trillion.
Although, despite the recorded depreciation, the NSE Growth Index appreciated by 3.26 percent.
Following last week’s performance at the NSE, analysts say that this week will be an amalgamation of sustained profit-taking duties and bargain-hunting.
READ ALSO: Telecom Firm, Briclinks, Debuts 10 Million Shares On NSE
What Analysts Say
According to the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, “Speculation seems to have slowed down in the equity space, on seeming yield improvement in the fixed income space, as market volatility continues to rise on the general decline of the key performance index and prices of stocks across all capitalisation size and sectors, except for the oil/gas that closed in the green.
“We expect the market to slow down its losing momentum and profits-taking, as bargain-hunters take advantage of the pullbacks to reposition their portfolios ahead of earnings expectations and reaction to numbers that would be unveiled, given that dividend yield remains relatively high.
“The decline in Nigeria’s equity market is, notwithstanding, creating another entry opportunity for discerning investors as the benchmark All-Share index breaks down.
“The price corrections or pullbacks have made some of the equities become more attractive for positioning, given the noticeable improvements in their yields.”
READ ALSO: Kano-Maradi Rail To Gulp $1.9bn – Amaechi
On the other hand, analysts at Codros Capital predicted that the calibration of leading stocks at the NSE would invite investors to take advantage and make “re-entry ahead of FY 2020 earning announcement”.
They said, “With the moderation in the prices of bellwether stocks this week, we expect savvy investors to take advantage of this and make re-entry ahead of their FY 2020 earnings announcement.
“However, we note that the recent hike in OMO rates by the CBN will continue to stoke uncertainties on the direction of yields, keeping risk-averse investors on the side-lines.
“Thus, we expect zig-zag market performance in the week ahead. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”
Equity Market Performance
The equities market in Nigeria started off on a rough note with its resumption in February, followed by 28 stocks being sold off, while the ASI fell by 0.13 percent.
On Monday the ASI dropped by 54.76 percent (0.13 percent).
Investors incurred a loss of N29 billion in value as the market capitalisation fell to N22.158 trillion.
High-value stocks such as Julius Berger, Vitafoam Nigeria, Nestle Nigeria, Flour Mills of Nigeria, and Access Bank recorded losses that affected the stock market.
